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Finally! I installed Morrowind in anticipation of this when that first video popped up, and I was beginning to wonder if it was actually coming. Can anyone who's familiar with the game on whether I need to track down any further mods on top of Overhaul? I've never played it before, largely due to the preponderance of mods that are (apparently) necessary to make it playable.

Ahh... Morrowind.. the first real RPG I ever played that gave me that open sandbox feeling :)
Will definately check this out..

Heh, to an Elder Scrolls veteran it was more of a claustrophobic, hemmed-in experience. But still awesome, especially because it wasn't just someone's back garden and lovely neighbourhood crypt copy-pasted across an area the size of Great Britain.

What really got me hooked was the atmosphere of the game. I hope this project preserves and even enhances that (less immersion-breaking character models, I hope).

Its also the only game I can think of that requires you to read something in your inventory to proceed in the story, I loved that and no one else has done that because they all want you on the right path to get you the story. It basically said you can explore.

This mod is just sound & graphics, right? Are there any tweak pack style mods for Morrowind that fix bugs and make minor alterations while keeping the original game intact?

This mod list is what you're looking for, in particular the list creator's own mod "BTB Game improvements"

makes the game much more balanced and increases difficulty, although some might say it makes the game a bit "drier" due to the lack of unbalanced weapons/armour/portions and enchanting. Essentially it's much more difficult to become a god(ess) by about level 30

I'm about to install this mod and replay Morrowind first time in seven years. So here is the question. I vaguely remember combat being terrible and magic/alchemy unbalanced. Are there any good balancing mods? I checked nexus but most top mods are just cosmetic things, hairstyles and etc.

Magic is all right, alchemy is unbalanced but that's fairly normal in Elder Scrolls games. Just don't power-level it and you should be fine. Combat is all right if you like RPGs. Perhaps at low levels it suffers from relatively low chances to hit with relative high damage, although you might find this exciting (later Elder Scrolls games lose a little excitement because both sides' health bars drop slowly and consistently throughout the fight rather than jump around more randomly). Avoid the trap of thinking that the game is an action game. It is a little, in the sense that you have to aim in the right direction, but it's more of an RPG.

One problem it does have is that there's no good way to determine whether at low levels you'll be able to fight the named NPCs in dungeons (there are no generic "bandits", each of them has a name and you can't tell how strong they are without fighting them).